Wisconsin Gov. Scott Walker said Wednesday he will not back expanding his state's Medicaid program as allowed under the 2010 health care law. / Michael P. King, Wisconsin State Journal, via AP

by Kelly Kennedy, USA TODAY

by Kelly Kennedy, USA TODAY

WASHINGTON - Two Republican governors said Wednesday they will not back expanding their states' Medicaid programs as allowed under the 2010 health care law, saying the extra costs would burden their states.

The decisions by Govs. Scott Walker of Wisconsin and Mike Pence of Indiana leave 10 remaining Republicans who have yet to decide on expanding their participating in the federal-state health care program for the poor. All of the governors have come under heavy lobbying by health care providers who say the economic benefits are too good to ignore.

In Wisconsin, Walker outlined a hybrid approach that involves tightening income eligibility for Medicaid, lifting a cap on a program that covers childless adults and forcing more people to buy insurance through a government-run marketplace known as an exchange.

Pence was not as definitive as Walker, saying that he would not expand Medicaid but asked Health and Human Services Secretary Kathleen Sebelius to allow the state to use its Healthy Indiana Program to serve the expanded Medicaid population.

"Medicaid is broken," said Pence, adding that expanding it would cost "upwards of $2 billion over the next seven years."

Walker and Pence bucked the recent trend that had seen six Republican governors back expansion. They are from Arizona, Michigan, New Mexico, North Dakota, Ohio and Nevada. Thirteen Republican governors have declined to participate, and 10 others have not announced a decision.

"It's fascinating, because on the political level, it's a classic clash between money and politics," said Dan Mendelson, CEO of Avalere health advisory company. He said he and his 170 advisers working with the health care industry are hearing plenty about expansion.

"It sets up a really difficult tension between the Republican governors and the hospitals, but there's an increasing level of political cover being given to the governors to expand their programs," Mendelson said.

In Florida, where Republican Gov. Rick Scott is undecided, a recent poll found that 60% of residents would like to see Medicaid expanded, Mendelson said. Several economic studies have found the states may benefit both by federal funds going into local economies, as well as taxes from those sales going back into the coffers of local government.

Scott originally said he worried that expanding Medicaid would cost the state too much money. But since a Georgetown University study found Florida would save about $300 million in 2014, and $100 million in 2020 - after the state takes on 10% of costs, Scott has stopped saying Florida was an absolute no for expansion.

Those backing expansion said the added financial benefits outweighed their opposition to the health care law. For example:

In Arizona, Gov. Jan Brewer said last month that she supported expansion because she worried that if she didn't participate, her constituents' federal tax money would go into the national Medicaid pot and not help Arizonans.

Gov. Rick Snyder of Michigan said expanding Medicaid would save his state $200 million a year.

In North Dakota, Gov. Jack Dalrymple said Republican dislike of the law should not stop his state from expanding Medicaid.

All states with Democratic governors have either chosen to participate or are leaning toward participating.

Under the law, states may extend Medicaid to 19- to 64-year-old individuals if their family's income was less than 138% of the federal poverty level, and the federal government will cover 100% of their costs through 2016. Beginning in 2017, the states will have to cover 5%, which will gradually increase to 10% in 2020. The Supreme Court decided the government could not penalize states for not participating in the expansion by withholding Medicaid funds for existing programs.

States must have their programs in place by January to receive the federal money.

Ed Haislmaier, a health policy analyst for the conservative Heritage Foundation, said the 10% shift in 2020 will be too much for the states to handle with their "overwhelmed" budgets. He said he understands the states' need to participate, because it's not popular for taxpayers in one state to send their money to other states if their governors choose not to participate.

Steve Filton, senior vice president of Universal Health Services, said hospitals have lobbied for expansion, because they thought they had expanded Medicaid benefits would make up for revenues they lost as part of the health care law. Filton's company owns 100 hospitals.

Last year's Supreme Court ruling that upheld the requirement that uninsured people buy health insurance also allowed states to turn down expanded Medicaid. That cost hospitals half of their expected deal, Filton said.

Though states could reap a large return from expanded Medicaid benefits, the extra costs are a challenge, said Michael Morrissey, a University of Alabama health care economist.

A recent study by Morrissey found that Medicaid expansion in Alabama would generate almost $20 billion in new income from 2014 to 2020 and $1.7 billion in extra taxes to local government. That assumed that 60% of the uninsured would get insurance. To get those benefits, Alabama taxpayers would have to come up with $771 million in new revenue to pay to administer the expansion, he said.

Alabama's governor, Gov. Robert Bentley, a Republican, declined to participate in the expansion, saying the state could not afford it.